According to In-Stat, 9% of consumers with broadband are downloading most of the content online. These users tend to be the heaviest media users, who watch content on the PC, TV and mobile phones, have Netflix subscriptions and watch a lot of movies. The 90% of other consumers with broadband split evenly into two groups: social users who use the Web for social networking and YouTube, and passive users who use the Internet simply to find information, read news stories or look up product information. In-Stat believes that these users could eventually fall into the group of heavy users that do use P2P networks to watch shows when they can?t find them legally. As a result, content holders should be watching these people and set up strategies for monetizing online video and satisfy this group.

"What is needed is a new approach to monetizing digital content including moving a relatively small group of consumer households that do the bulk of P2P downloading (power users), to legal services," says Keith Nissen, In-Stat analyst. "The question is whether the video industry wishes to control its own destiny, or get crushed by technological change, similar to what is occurring in the music business."

Nissen argues that the best way is to use Digital Rights Management technology to enable consumers to watch content in more ways on more devices, rather than using it to prevent consumers from making backups or transferring content to devices.

In-Stat also sees watermarking becoming a growing technology to track licensed usage rights. By including watermarks on downloads that note who owns the download and what rights they have, users might pay different amounts depending on what they want to do.

A migration of power user households from P2P to legal video services would generate $1.4 billion in subscription revenue and $1.1 billion in advertising revenue, according to th research firm.

The complete research "Adopting Digital Rights Information Management" is availabel at http://www.instat.com